The CVS/pharmacy manager happened to see the officer outside in the parking lot when the man was making a purchase with the counterfeit bill and called him over.
Fernando Gonzalez, 24, Manuel Orozco and Jose Velasquez were arrested at the scene after officers recovered four additional $100 counterfeit bills. The ages and hometowns of Orozco and Velasquez were not available.
Plastic baggies of suspected cocaine, methamphetamine and marijuana were also allegedly found on Orozco.
"There are little crews that go out with counterfeit money and work as teams in different areas," said police Sgt. Robert Quesada. "They don't come out often, but the clerks need to be on the ball and pay attention to the money."
The men also attempted to pass off bills at the Henry's Farmers Market.
"Normally the store would call the police when counterfeit bills are suspected, but there happened to be officers nearby in this case," said Mike DeAngelis, spokesman for CVS/pharmacy. "We are cooperating with the police investigation into this matter."
Henry's Farmers Market representatives were not immediately available for comment, and neither business would disclose policies on counterfeit identification and training for employees.
"Unfortunately, for these men, they chose to hit Burbank," Quesada said. "As a smaller city with a good police department, they were easily discovered."
All the men were charged with possessing counterfeit bills and burglary.
Burbank Police have issued a warning to businesses in the city and the Burbank Chamber of Commerce to be vigilant of counterfeit activity as more retail establishments across Los Angeles County have fallen victim to the trend.
According to the Secret Service, the agency tasked with investigating counterfeiting, the fake money can be identified in a number of ways, including identical serial numbers, the quality of the paper and watermarks.